Icahn Dealt Legal Blow In Lawsuit Against Dell

Corporate raider Carl Icahn was dealt a legal defeat by a Delaware judge who denied his fast-track request for a lawsuit aimed at scuttling the $24.8 billion buyout of Dell by its founder Michael Dell. The ruling found there was reasonable claim that a scheduled Sept. 12 shareholder vote was rigged.

Icahn asked a Delaware Chancery Court to accelerate his lawsuit against Dell filed Aug. 1. That request was denied, however Icahn will still get his day in court to have his case against Dell heard.

Icahn's lawsuit attempts to, among other things, stop a change in the record date -- the date shareholders must have owned shares to be eligible to vote -- and force Dell to hold the annual meeting and the shareholder vote on the same day before Sept. 15.

Dell announced on Friday it has scheduled its annual meeting and board elections on Oct. 17. The shareholder vote, for or against Michael Dell and Silver Lake's go-private bid, will take place Sept. 12.

Icahn and his financial partner Southeastern Asset Management say CEO Dell is trying to buy the company back for less than it's worth. In his suit against Dell, Icahn argued the board of directors was breaching fiduciary duties to shareholders by accepting a buyout offer from Michael Dell that was too low.

Icahn's legal team says its suit centers on "whether our law will allow these directors to act as Platonic guardians, repeatedly refusing to take 'no' for an answer on the merger, stacking the cards in its favor and deliberately postponing the annual meeting."

Icahn's lawsuit was triggered by a deal Michael Dell hammered out with the Dell special committee overseeing the shareholder vote that ups his buyout price to $13.75 from $13.65 and added a special dividend of 13 cents per share. As part of the agreement, the committee said it would change the record date and also change the way absentee votes are counted. Only votes cast directly by shareholders and by institutional investors would be counted, and absentee votes would not be considered "no" votes.

Icahn and Southeastern have made it their mission to derail Michael Dell's buyout plan. Both want to keep the company public, oust CEO Dell, and replace Dell's board with their own. On Friday, Southeastern named Icahn and 11 other nominees for the Dell board. Icahn wants to use the annual meeting in October to push his agenda.

According to Bloomberg, Delaware Judge Chancellor Leo Strine, who struck down the fast-track request, said the Dell board "acted in good faith." According to Bloomberg, 20 related lawsuits are pending in Delaware by shareholders, and a lawsuit has already been filed in federal court in Houston.